Tesla Briefly Shutting Down Fremont Plant To Prepare For July Model 3 Production

Tesla will be shutting down its Fremont, Calif., factory to get ready for high-volume Model 3 production to start in July.

The electric automaker said the “brief, planned” pause will make it possible to add capacity in the assembly plant’s paint shop and a few other maintenance items.

It’s necessary for the company to meet its ambitious target of starting production in July to increase vehicle production volume about five-fold. Expectations are strong for the $35,000, 215-mile range to a company known for missing production targets.

“This will allow Tesla to begin Model 3 production later this year as planned and enable us to start the ramp towards 500,000 vehicles annually in 2018,” said a Tesla spokesman to Reuters.

The Tesla spokesman also said that the brief factory shut-down was not expected impact first-quarter production or delivery figures. The company had already added production days to compensate for the earlier forecast, he said.

Separately, sources told Reuters that Tesla planned to begin test-building the Model 3 on Feb. 20.

That would mean the company could share that news two days later at its quarterly shareholder conference call. Sources didn’t know how many early production models would be built, but it’s likely to be a small number to test out the assembly system and the quality of the parts and components.

It could also tap into Tesla’s tradition of stoking excitement among its loyal customers and financial backers.

“What better way to stoke the fan base and Wall Street than to wheel out pre-production models,” said one person familiar with Tesla’s plans.

The Tesla spokesman declined to comment on the company’s production schedule.

Tesla CEO Elon Musk last year told investors and the more than 370,000 customers who put $1,000 deposits on a Model 3 that the company intended to start building the cars in July 2017.

Several analysts and suppliers said the timeline was too ambitious and would be difficult to achieve, pointing to Tesla’s history of missing aggressive production targets on the Model S and, especially, the Model X. Last minute tweaks to the Model 3’s design could delay the schedule and add costs as suppliers have to revise tools and molds to meet the new specifications, sources said.

One source told Reuters that last week that design changes were still underway for the Model 3, which could potentially hinder the ramp-up to full production.

Tesla declined to comment on whether the design was still being modified.

SEE ALSO:  Tesla Hiring More Gigafactory Employees To Build Model 3 Motors and Components

Tesla’s Gigafactory in Nevada is preparing for full production of lithium-ion battery packs and by adding electric motors and gearbox components to this plant. Last month, the company announced it would be making an additional $350 million investment that will create 550 more jobs at the plant to meet these new goals.

Still, a few analysts remain skeptical about Tesla keeping its word on hitting full production by July.

“We assume 0 Model 3 deliveries in ’17,” Barclays analyst Brian Johnson wrote in a January 3 note to investors.

Morgan Stanley’s Adam Jonas in a January 19 note said he expected a “soft launch” of the Model 3 to be delayed until late 2017.

Reuters


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